FX.co ★ GBP/USD breaking forecast on October 6, 2021

The UK's final business activity data provided support to the pound sterling. According to the preliminary estimate, business activity in the UK was set to decline. Thus, the services PMI was projected to drop to 54.6 versus 55.0 in the previous period, and the composite index was forecast to fall to 54.1 from 54.8. However, business activity in the services sector rose to 55.4 and the composite PMI grew to 54.9.

United Kingdom Composite PMI:

The pound could have increased significantly but the final PMI results in the US came better than expected. Thus, the services PMI dropped to 54.9 from a preliminary of 54.4. The composite PMI fell to 55.0 from 55.4 compared with a preliminary estimate of 54.5.

United States Composite PMI:

The pound is expected to incur losses today because employment in the US should soar by 415K. Given the current unemployment rate, a 200K increase would already be enough to show stable employment. As we can see, the results show that unemployment is decreasing and the US labor market is steadily recovering. The next important event will be the release of a closely-watched employment report by the US Labor Department.

United States ADP Employment Change:

The GBP/USD pair has been moving in a corrective pattern for four days. The pivot point is seen at the support level of 1.3400. The pound has strengthened by more than 230 pips over this period.

Meanwhile, the RSI has almost reached the overbought zone on the H4 chart. This is likely to be the first signal indicating the end of the corrective move.

Based on the daily chart, the correction is seen as an integral part of the downtrend that started in early June.

Outlook

The quote has reached the 23.6% retracement level where the corrective move slowed its pace. We can assume that if the pair consolidates below 1.3565, the price is likely to head towards the support level of 1.3400.

Alternatively, the correction may continue if the quote consolidates above 1.3640. In such a case, the price may move towards 1.3700 where the RSI suggests the pair becoming overbought.

In terms of complex indicator analysis, technical indicators are giving a buy signal for short-term and intraday trading due to the formation of a technical correction. In the mid-term, technical indicators are signaling to sell the instrument.